MANILA, Philippines — The country’s economic growth slowed in the third quarter as weather disturbances affected agricultural output and the performance of other production sectors, but the government remains optimistic that the six to seven percent growth target can still be achieved this year.
In a press conference yesterday, National Statistician Dennis Mapa said the country’s gross domestic product (GDP) grew by 5.2 percent in the third quarter of this year, easing from the previous quarter’s 6.4 percent growth and six-percent expansion posted in the third quarter last year.
Despite the slower growth, National Economic and Development Authority Secretary Arsenio Balisacan said the Philippines remains one of the fastest-growing Asian economies, behind Vietnam, which posted a 7.4-percent growth, but ahead of Indonesia’s 4.9 percent, China’s 4.6 percent and Singapore’s 4.1 percent.
On the production side, Balisacan said the slowdown in economic growth was due to the 2.8 percent contraction in agriculture, forestry and fishing sector.
According to Balisacan, the decline in the crops subsector of the agriculture sector reflected the impact of the El Niño during the planting season and the typhoons’ effects during the harvest season.
Fishing and aquaculture also declined due to the fishing ban in Cavite and Bataan amid an oil spill incident last July and the cancellation of fishing trips due to bad weather conditions.
The NEDA chief also cited the moderation in growth in the industry and services sectors at five percent and 6.3 percent, respectively, for the slowdown in economic growth.
“The successive typhoons suspended classes and work in government and some private offices, resulting in administrative delays and supply chain disruptions,” he said.
Government spending also posted a slower growth of five percent in the third quarter from 11.9 percent in the previous quarter and 6.7 percent in the same quarter last year.
“I think the climate-related disruption, disturbances that happened in the last quarter, could have slowed down this spending, and that’s even more so for those that are related to infrastructure,” Balisacan said.
The country’s exports of goods and services also recorded a one-percent contraction in the third quarter, as exports of goods were pulled down by the sharper decline in electronics products, particularly semiconductors, while the slowdown in the export of services was mainly due to the decline in air travel.
For the January to September period, economic growth averaged 5.8 percent, below the government’s six to seven percent growth target for the year.
Balisacan said the economy needs to grow by at least 6.5 percent in the last quarter to meet the target for the year.
“We remain optimistic that this growth target is attainable,” he said, noting expected increases in holiday spending, more stable commodity prices, lower interest rates and a robust labor market.
While the Philippines is not likely to hit this year’s growth target, Moody’s Analytics economist Sarah Tan said that the economy is forecasted to again outperform many of its regional peers in terms of growth.
She said the third quarter GDP result puts the economy on track to grow by 5.8 percent this year.
“Monetary policy easing will support private consumption and investment growth in the fourth quarter, but soft external demand will keep a lid on export growth,” she said.
To ensure the medium-term growth trajectory remains on track, Balisacan said the government needs to aggressively push for the sustained implementation of infrastructure projects.
In addition, the government will need to upgrade tourism infrastructure and services, as well as improve the transport networks across tourist areas to lower the cost of traveling.
To sustain services sector growth, he said the government must keep up with technological developments like artificial intelligence.